At the Government session on 11th February 2020, the Decree on establishing the Program of direct benefits from the budget of the Republic of Serbia to economic entities in the private sector was adopted in order to mitigate the economic consequences caused by the epidemic of COVID-19 disease caused by SARS-CoV-2 virus (hereinafter “Program“).
As in 2020, the new Program envisages direct benefits as incentive measures, which are non-refundable payment to economic entities in the private sector in the manner and under the conditions provided by the Program.
Who is entitled to direct benefits?
The right to direct benefits can be exercised by domestic economic entities in the private sector that are not beneficiaries of public funds and which were established and registered with the competent authority by the date of entry into force of the Program or by 13th February 2021, or if by the date of entry into force Program became a VAT payer. Also, it is necessary that these economic entities are not temporarily deprived of their personal income tax on the last day of the month preceding the month in which direct benefits are paid. Branches of representative offices of foreign legal entities are also entitled to assistance.
In addition, the right to the payment of direct benefits may be exercised by entrepreneurs, farmers and flat-rate entrepreneurs who have registered a temporary cessation of activities at the earliest on the day of entry into force of the Program.
On the other hand, banks, insurance and reinsurance companies, financial leasing companies, as well as payment institutions and electronic money institutions are not entitled to direct benefits.
What do the measures include?
Incentives to the private sector include the payment of direct benefits from the budget of the Republic of Serbia, which represent non-refundable funds in the amount of 50% of the minimum net salary for January 2021 or 15,450.12 dinars per employee. The direct benefits in question will be paid in three months (in April, May and June 2021).
The received direct benefits can be used exclusively for the payment of salaries and compensation of salaries to employees, no later than 30 July 2021.
How to apply for benefits?
Business entities can accept the incentives in question by giving a special statement on the portal of the Tax Administration e-Taxes from March 1, 2021.
It is important to keep in mind that the statement in question is given separately for each direct benefit, and no later than the last day of the month preceding the month in which the direct benefits are paid.
To private entities in the private sector that do not submit the PPP-PD form, i.e., who do not have employees and are not entrepreneurs, i.e., entrepreneurs farmers who have opted for the payment of personal wages, direct benefits are paid without giving a statement of acceptance of direct benefits within the deadlines and in the manner prescribed by the Program.
Account opening and disbursement
For the purpose of payment of direct benefits, a special purpose account shall be opened within the bank which, at the time of entry into force of Program, maintain a current business account of that business entity (hereinafter: “COVID account“). The Treasury and the bank cannot charge a fee or other costs for that account. After the transfer of funds from the competent ministry, the Treasury Department transfers funds to economic entities in the private sector to their COVID accounts. Funds in the COVID account are exempt from forced collection.
An economic entity that has current accounts with several banks at the moment of entry into force of this Decree is obliged to submit data on the name of the bank from the previous paragraph with which the COVID account will be opened no later than 25th March 2021, via electronic services of the Tax Administration.
In the event that a business entity due to improper execution of a payment transaction mistakenly transfers funds from COVID accounts to business accounts of persons for whom benefits are not intended, banks will, after receiving written notice and request of the economic entity that made the mistake in each specific case and in situations when they assess that it is an unintentional mistake, allow their client to pay funds that it previously transferred by mistake from the dedicated account.
Calculation of the number of employees
Payments are planned for April, May and June 2021, in the amount obtained as a product of the number of full-time employees for whose salaries and wage compensations the PPP-PD form was submitted by March 31 (for February), April 30 (for March) and May 31 (for April). The number of employees of entrepreneurs, flat-rate entrepreneurs, farmer entrepreneurs and entrepreneurs of another person shall be increased by one, unless the entrepreneur, flat-rate entrepreneur, entrepreneur farmer or entrepreneur at the same time have the status of the employee or pension beneficiary. The number of employees is also increased by the number of part-time employees, by increasing the total number of part-time employees for each part-time employee in proportion to the agreed percentage of part-time employees in relation to full-time work, which is determined by basis of data from the PPP-PD form for the appropriate accounting period.
On the other hand, the number of employees is reduced by the number of employees for whom the payment of salary, i.e., salary compensation, for the accounting period falls entirely on the burden of other payers.
Loss of entitlement to assistance
An economic entity loses the right to use the assistance if, by the expiration of three months from the last payment of direct benefits, it reduces the number of employees by more than 10%, not counting employees who concluded a fixed-term employment contract with a private sector entity before entering the validity of the Program for the period ending in the period from the date of entry into force of the Program until the expiration of three months from the last payment of direct benefits.
Also, companies that pay dividends from the day the Program enters into force until the end of 2021, are not entitled to assistance.
Business entities that lose the right to assistance are obliged to refund direct benefits with interest calculated at the rate at which interest for late payment of tax liabilities is calculated, starting from the day when they were paid individual direct benefits, no later than five days from days of termination of the right to use direct benefits.
This article is for informational purposes only and does not constitute legal advice. If you need additional information regarding the subject, feel free to contact us by email email@example.com or by phone +381677049551.